FHA Streamlines---A recap of streamline guidelines…

This has been the hot product over the last year, and I wanted to remind borrowers of some of the great advantages…In such a tough market, the biggest advantage is that FHA streamlines do not require an appraisal. I can’t tell you how crucial that is since most homes have dropped significantly in value. Another one is that income and assets are not required. Banks will require a “mortgage only” credit report to show your payment history has been on time. Some banks will even accept a 1 x 30 on a mortgage. That is having 1 late payment over 30 days. The underwriting is pretty smooth, because of the previous 2 reasons.

Some people always ask why brokers prefer to close at the end of the month, and with FHA, it is because they charge a monthly interest. As you are aware, whenever you do a refi, there is a 3 day waiting period before the loan funds. If a FHA loan funds early into the next month, FHA will charge a full month’s worth of interest, which defeats the purpose of the streamline. On streamlines, the borrowers are normally asked to bring a month’s payment to the settlement. Ex., if the loan close on April 24th, the borrowers will NOT make a May first payment, there next payment will June first at the lower rate.


Also, when the home was purchase or refied, there was an upfront MIP (Mortgage Insurance Premiun). When a streamline is done, you will receive an MIP refund that is applied as a credit at settlement. The MIP refund is calculated by FHA. Streamlines need to show a net tangible benefit to the borrowers. Ex. Would be lowering your rate, going from an ARM to a FIX rate, or going from 30 years down to 15 tears.

Finally, some borrowers have helped their relatives to qualify for a home purchase by also going on the loan and title. Streamlines also apply to Non-Occupant Co-Borrowers. The process is still the same as a regular streamline.